2010 (8) TMI 272 - AT - Central Excise

Demand clandestine removal statement of co-accused sole basis for Revenue cassse - Revenue has rested its case on the sole basis of statement given by the co-accused Held that - no independent evidence on record showing that the fabrics found in the premises of Folding Works were actually belonging to the respondents - solely relying upon the statement of co-accused cannot be held to be justifiable Appeal is rejected

Summary

Issues:
- Appeal against order passed by Commissioner (Appeals) allowing the appeals of the respondents.
- Allegation of demand confirmation and penalty imposition on respondents based on seized fabrics.
- Lack of independent evidence showing fabrics belonged to respondents.
- Failure to record statements of respondents and lack of confrontation with co-accused statements.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, Ahmedabad arose from the order passed by the Commissioner (Appeals) allowing the appeals of the respondents, which aggrieved the Revenue, leading to the present appeal being filed.

2. The case involved the seizure of processed fabrics from the premises of a folding works business, M/s. Ashirward Folding Works, following a search. The fabrics were allegedly received from M/s. Akash Fabrics Pvt. Ltd. The Revenue conducted verifications at related factories, including M/s. M.G. Textiles, with records matching excise records. However, the factory premises of M/s. Shree Narayani Textiles Pvt. Ltd. were not visited.

3. During the investigation, other units mentioned by a co-accused were visited, but their records were found correct. Notably, no statements were recorded from the representatives of these units regarding the fabrics seized from M/s. Ashirwad Folding Works.

4. Proceedings were initiated against the respondents based on the co-accused's statement, resulting in demand confirmation and penalties imposed by the original adjudicating authority. Appeals were filed by all four assessees, with the appeals of two units allowed by the Commissioner (Appeals), and no further appeal was filed by the Revenue.

5. The main ground for setting aside the impugned order by the Commissioner (Appeals) was the lack of independent evidence linking the seized fabrics to the respondents. The Revenue's case solely relied on the co-accused's statement without recording statements from the respondents or confronting them with the co-accused's statements to ascertain the accuracy.

6. The Tribunal found that the Revenue's failure to gather independent evidence and the lack of interaction with the respondents undermined the case's justifiability. Consequently, the Tribunal upheld the Commissioner (Appeals) order, rejecting the Revenue's appeals E/1790/06 and E/1790/06-A.

7. In conclusion, the judgment emphasized the importance of independent evidence and proper investigation procedures, highlighting the insufficiency of relying solely on co-accused statements without further corroboration or verification from the respondents.